[ad_1]
UK shoppers are holding back on spending after dire warnings about the impact of a no-deal Brexit. The value of UK retail sales fell 1.3 per cent in September compared with the same month last year, the worst September since the British Retail Consortium started collecting the data in 1995.
Jewellery chain Links of London was the latest high street name to go into administration. But some retailers are investing in new sales channels and techniques to buck the trend.
Card Factory
Card Factory, the UK’s biggest specialist retailer of greeting cards, wrapping and gifts, is seeking cheaper ways to increase sales than opening ever more stores.
It has struck deals with Aldi, the discount supermarket, The Reject Shop in Australia and Matalan. The Wakefield-based retailer will supply The Reject Shop’s 360 stores for five years. Bigger, branded concessions are being trialled in 15 Matalan stores.
Card Factory has a third of the UK’s £1.4bn greetings card market. Like-for-like sales in stores increased 1.2 per cent in the six months ended July 31 and it opened 26 more shops to total 991. Online sales were up by 25 per cent.
However, despite revenue rising 5.5 per cent to £195.6m, there was a 7.9 per cent drop in underlying pre-tax profit to £22m.
The retailer said it had to increase stock levels “for Brexit contingency planning, investment in new lines and the acceleration of seasonal buying”. Wage costs also rose.
Karen Hubbard, chief executive, termed it a “satisfactory” performance and pleased shareholders with a 5p a share special dividend as well as a 2.9p interim dividend.
Debt increased by about £10m to £317.3m, a worry for analysts. However, the shares rose as much as 8 per cent on Friday to 173p after a Brexit deal appeared to move closer. Liberum expects adjusted full year pre-tax profits of £70.5m.
ScS
A new range of eco-friendly carpet made from recycled marine waste and fishing nets, sold initially only by ScS, is among the products the sofa and flooring retailer hopes will attract cautious consumers.
The company’s autumn marketing campaigns include one with a Spice Girls-inspired “spice up your life” slogan as it seeks to counter a climate of increasing political and economic uncertainty. It attributes a decline of 4 per cent in like-for-like orders in the first 12 weeks of its current financial year, to September 29 to this uncertain backdrop.
Sunderland-headquartered ScS is a retail survivor; its origins date back more than a century when it sold china chamber pots and carpet squares to miners and shipbuilders. It trades from 100 stores across the UK and has identified key sites where it would like to open.
In its last financial year, to July 27, sales rose 1.8 per cent to £333.3m and pre-tax profit from continuing operations rose from £13.7m to £14.3m. It recorded like-for-like order growth of 4.2 per cent last year but is having to swim against the tide; in-store flooring sales, where the wider market shrank, dropped 1.2 per cent.
Ecommerce is a vital growth area; continued investment drove a 21.7 per cent increase in online sales to £16.8m.
On house broker Shore Capital’s revised forecasts, ScS stock is trading on a forward price/earnings ratio of 9.4, well below the FTSE 350 retail index’s average of 13.8 times. The shares closed at 242p.
Vertu
It is a very tough market for the UK car trade, where Vertu is the country’s fifth biggest automotive retailer by revenues with 123 outlets.
During September, a crucial month for new number plate registrations, the company spent an extra £600,000 on marketing. However, its like-for-like new retail volumes were down 1.6 per cent overall. Increased sales of used vehicles (3.5 per cent up by volume) and service revenues (11.4 per cent up like-for-like) were needed to beat last September’s performance.
Vertu’s new chatbot Leo, developed at its Gateshead headquarters, took 400 service bookings last month. The company, best known to consumers under the Bristol Street Motors brand, is investing in software development to increase market share.
In the first half of its current financial year, to August 31, Vertu increased revenues by £86.7m (5.6 per cent) to £1.6bn, with like-for-like revenue growth of 2.3 per cent, but pre-tax profit dropped from £17.3m to £16m.
Vertu, which had no debt at the end of the first half, wants to buy more dealerships in a struggling market. “There are two choices when things are hard,” said Robert Forrester, chief executive. “You can lie down and die or you can attack; I prefer attack.”
House broker Zeus puts the estimated 2020 price/earnings ratio at 6.5 falling to an estimated 6.0 in 2021. The shares closed at 35p.
[ad_2]
READ SOURCE
